The Vulnerability of Minority Homeowners in the Housing Boom and Bust

Patrick Bayer, Fernando Ferreira and Stephen Ross

No 19020, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines mortgage outcomes for a large, representative sample of individual home purchases and refinances linked to credit scores in seven major US markets in the recent housing boom and bust. Among those with similar credit scores and loan attributes, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. There is important heterogeneity within minorities: black and Hispanics that live in areas with lower employment rates and that have high debt to income ratios are the driving force behind the observed racial and ethnic differences in foreclosures and delinquencies. Moreover, these estimated differences are especially pronounced for loans originated near the peak of the housing boom even after controlling for the effect of origination timing on households’ equity position. These findings suggest that black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise concerns about homeownership as a mechanism for reducing racial disparities in wealth.

JEL-codes: J15 R2 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-ban, nep-dem and nep-ure
Note: LS PE
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Citations: View citations in EconPapers (6)

Published as Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2016. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 1-27, February.

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Related works:
Journal Article: The Vulnerability of Minority Homeowners in the Housing Boom and Bust (2016)
Working Paper: The Vulnerability of Minority Homeowners in the Housing Boom and Bust (2014)
Working Paper: The Vulnerability of Minority Homeowners in the Housing Boom and Bust (2013)
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